Swiggy is working on its third fundraising round in the year so far amid increasing competition in the food tech space, which posted a 15% quarterly growth in the number of daily orders through 2017. According to The Economic Times, the online food-delivery platform has held discussions with a host of investors to raise $500-700 million, a significant portion of which China's Tencent Holdings wants to contribute. This reportedly could turn out to be the WeChat owner's biggest cheque in India's food tech space.

The buzz last month was that Swiggy was in talks with new investors as well as existing ones - including South Africa's Naspers Ltd, China's Meituan Dianping, US-based hedge fund Coatue Management and Russia's DST Global - to raise up to $500 million. But now, given the unprecedented interest it is receiving from global investors, the Bangalore-based start-up is thinking bigger.

A source with direct knowledge of the negotiations told the daily that discussions on the investment size and valuation have progressed significantly north in the last three weeks. "The funding size under discussion is around $650 million, with Naspers looking to invest $200-250 million," this person added.

The other suitors lining up include growth equity firm General Atlantic, hedge funds Tybourne Capital and Hillhouse Capital, and SoftBank. The daily added that while the startup has been in talks with the latter since last November, it is not clear whether the Japanese behemoth will participate in the upcoming fundraising round or invest independently at some point.

If things go to plan, Swiggy is looking at a valuation of $2.5-3 billion. "However, the talks are yet to take definite shape and will take another 3-4 weeks to crystallise," the source added.

This development comes a little over two months after Swiggy's $210 million Series G round in late-June, which propelled it into the much-coveted unicorn club. It has raised a total of about $465 million so far, but it isn't the only player aggressively building up a war chest. Also vying for a larger slice of the red-hot food delivery pie - expected to touch $4 billion in 2020, according to RedSeer Consulting - is arch rival Zomato.

To stay ahead of each other, both the companies are expanding their geographical reach and trying to make inroads into each other's strongholds. Swiggy is looking to establish a strong foothold in North India, where Zomato holds sway, while the latter is looking to do the same in the Swiggy-dominated southern cities. Both players are not only offering discounts but are also trying to rope in restaurants exclusively by cutting down on the commission they get. To this end, both the companies are burning cash to the tune of $18-20 million per month and, hence, have been raising funds more frequently.

Furthermore, Swiggy also needs funds to fan its ambitions in the hyperlocal delivery segment. The company is planning to start delivery for categories like medicines, groceries and flowers in their diversification strategy. The buzz is that the service would also include a customer-to-customer pick-up and drop service. To see this plan to fruition, the company has already taken its first step by acquiring Scootsy, an on-demand delivery service based in Mumbai.

In fact, this was the 11th deal in the mergers and acquisitions space since January 2017, as per data from Tracxn, a startup research platform. And more such deals are in the pipeline.